Tuesday, September 30, 2008

Contrarian Patriots

"[I]in our recent study of 750 of the most significant U.S. business failures of the past quarter century, we found that nearly half could have been avoided."

Paul B.Carroll and Chunka Mui, 7 Ways to Fail Big, Harvard Business Review, September 2008

At the heart of these "inexcusable" failures are wrong-headed strategic decisions that misapply seemingly sure payoffs from synergies, staying the course, related markets, techno fixes, consolidation, and rolling up small units or enterprises. Sometimes these strategies work, but not in all cases.

The bankrupcy of Conesco in 2002 following its purchase of Green Tree Financial is a "financial engineering" failure story with all the warning signs of our upcoming financial crisis written in capital letters. This case represents not only a business failure, but a failure of oversight and learning.

"[W]e recommend that companies institute a formal review by a devil's advocate who is truly separate from the strategy development process and has explicit license to ask tough questions."

Sounds like some respect for contrarians, curmudgeons, skeptics, and other obnoxious truth-tellers.

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